Eskom has reported it’s financial results for the 2019 financial year, posting a 20.7 billion rand net loss. This is coupled with a net debt totaling around 430.8 billion rand. This was described as a record loss and just goes to highlight the severity of the threat the state-owned company poses to the national economy. The government unfortunately has been forced to step in and is offering 128 billion rand bailout over three fiscal years to help ease the debt burden on the state-owned enterprise.
Some of the reasons that were cited for this loss as posted includes a lower than expected 5.23% tariff increase approved or granted by the energy regulator of South Africa. They also cited a 1.82% decline in sales volumes, above inflation wage settlement with unions as well as escalating municipal debt. Eskom currently generates 95% of South Africa’s electricity.
The announcement of these results has come on the eve of the current and out-going CEO, Phakamani Hadebe who has resigned from his position citing personal health reasons. On Monday, Public Enterprises Minister Pravin Gordhan announced that Eskom chair Jabu Mabuza would take over as the acting CEO of the power utility. The process of employing the new CEO would be concluded with in three months.
The issues with Eskom are multi layered. They mention that they have thousands more employees than they actually need. They’re also confronted with huge cost over-runs at two new partially completed coal-fired stations.